Market turnaround unlikely in near future; demand washed out on Ganpati and Onam: HMSI

Market turnaround unlikely in near future; demand washed out on Ganpati and Onam: HMSI

The company plans to add 300 touch-points across the country to exiting 5,800 touch-points.

New Delhi: The Indian automobile industry might be pinning hopes on festive season for a possible revival but the country’s second largest two-wheeler maker Honda Motorcycles & Scooters India do not see any green shoots any time soon.

“It (the turnaround) can either be in six months or one year during this kind of slowdown. Nobody knows how the market is going to react to the BS-VI change-over and new price-positioning that is happening in the market,”said YS Guleria, Senior Vice President for Honda Motorcycle and Scooter India (HMSI).

He further stressed that the demand washed-out during Ganesh Chaturthi and Onam, and the sales around festive season in October-November cannot be predicted. “The festivals have not responded the way we were anticipating,” he added.

With increased price of BS-VI compliant vehicles (Activa 125 had 10% price increase), sales are expected to be challenging come April 2020. However, if the situation continues to remain the same, HMSI may be willing to absorb a part of BS-VI cost for a competitive price, Minoru Kato, President, CEO & MD, HMSI indicated.

Despite the 45 days inventory at dealerships, decline in rural market, increased two-wheeler insurance prices and weak sentiment, Honda plans to stay put with its Rs 2,400 crore investments for the current fiscal. The investment was announced by the company for models as well as production lines.

The company, till now has invested Rs 9,400 crore and with additional Rs 2,400 crore, HMSI would have invested Rs 11,800 crore by the end of this fiscal.

As far as the production is concerned, the company has capacity of 6.4 million units and with new production line coming, the capacity will increase to 7 million units by the first half of next year. “The production activity at the new line will depend on market sentiments and can be delayed. But, the construction is on-going and there will not be any change in investments for the new line,” Kato said.

Furthermore, the company plans to add 300 touch-points across the country to exiting 5,800 touch-points.